1. Field of the Invention
This invention relates to a method by which a distributor owns, manages, invoices, and automatically replenishes the inventory of a business that is a customer of the distributor so that the customer will not have to advance its own capital to maintain an inventory. The distributor invoices its customer for reimbursement, but only at the time when designated items from the inventory are sold to consumers.
2. Background Art
For small retail and large department and warehouse-type businesses, alike, maintaining an adequate inventory constitutes one of the most significant expenses for staying in business. The purchase of an initial or replenishment inventory, depending upon whether the business is established or new, can tie up operating capital for long periods of time and deny the business the opportunity to make needed improvements, such as expansion, advertising, hiring additional employees, and the like. In addition, a business must typically purchase all of the goods in a shipping container from a distributor even if there is only a small demand for the goods. In the case of a time-sensitive inventory, such as where merchandise is subject to spoilage or loss of efficacy over time, or where styles and consumer taste are known to change quickly, it is highly undesirable to maintain an inventory that cannot be quickly sold to consumers. Otherwise, the business is faced with high carrying costs as well as the possibility of wasting and/or losing its capital investment as a consequence of having to return or dispose of out-of-date merchandise or letting excess merchandise simply sit unsold on its shelves.
What is more, significant amounts of time are often spent by businesses to properly manage and restock their inventory. Otherwise, where a business carries a large number of different items to be sold to consumers, the business cannot always predict with accuracy when to re-order and the quantity of new merchandise required to replace its depleted inventory. Consequently, a new business may be overstocked or run out of inventory that is needed to generate income. In the alternative, the business can pay to have on-site inventory control professionals manage its inventory or leave inventory control to those responsible for delivering new stock. Nevertheless, unless the inventory is frequently inspected, a business may run low of needed items or mistakenly purchase an unnecessarily large supply of already fully stocked items.
Therefore, what is needed is a method by which to more efficiently manage the inventory of a business so as to enable it to reduce unnecessary outlays of capital while providing for the automatic and accurate replenishment of inventory to assure that the shelves of the business are regularly stocked with a suitable number of items based upon anticipated demand, whereby to avoid overstocking or running low of inventory for any prolonged period of time.